SCO Group Slaps IBM with $1B Suit

 
 
By Peter Galli  |  Posted 2003-03-06 Email Print this article Print
 
 
 
 
 
 
 

SCO President Darl McBride claims in an exclusive interview that the suit, which alleges that IBM sought to destroy the economic value of Unix, was "the only way forward for us."

The SCO Group, which holds all the intellectual property rights to the Unix operating system, on Thursday filed suit against IBM for more than $1 billion in the State Court of Utah alleging that IBM made "concentrated efforts to improperly destroy the economic value of Unix, particularly Unix on Intel, to benefit IBMs new Linux services business." The SCO filing, which eWEEK reported in an exclusive report last week, said that IBM originally entered into its Unix license agreement with AT&T in February 1985 in order to produce the AIX operating system. These agreements require that the Unix software code be held in confidence, and bar its unauthorized distribution or transfer.
As a result of IBMs unfair competition and the resulting marketplace injury, SCO is requesting damages in an amount to be proven at trial, but no less than $1 billion, together with additional damages through and after the time of trial, according to the filing.
SCO is also demanding that IBM cease what it refers to as anti-competitive practices based on specific requirements sent in a notification letter to IBM. If the requirements are not met, SCO will have the authority to revoke IBMs AIX license 100 days following the receipt of SCOs letter. In 1995, SCO purchased the rights and ownership of UNIX and UnixWare that had been originally owned by AT&T. This included source code, source documentation, software development contracts, licenses and other intellectual property that pertained to UNIX-related business. SCO became the successor in interest to the UNIX software licenses originally licensed by AT&T Bell Laboratories to all UNIX distributors, including Hewlett-Packard Co., IBM, Silicon Graphics, Sun Microsystems Inc., and many others. "SCO is in the enviable position of owning the UNIX operating system," said Darl McBride, president and CEO, SCO, in an interview with eWeek Thursday. "It is clear from our stand point that we have an extremely compelling case against IBM. SCO has more than 30,000 contracts with UNIX licensees and upholding these contracts is as important today as the day they were signed."
McBride said the bottom line was that SCO owned the source code to Unix and the right to that operating system. IBM had taken AIX and made it available to the Linux community in an unlawful way. "IBM has been happily giving part of the AIX code away to the Linux community, but the problem is that they dont own the AIX code," he said. "And so its a huge problem for us. We have been talking to IBM in this regard since early December and have reached an impasse. This was thus the only way forward for us." The Unix contracts held by SCO were "extremely powerful and one of the remedies under the contract is that we have the ability to revoke their AIX license," he said. "We have to give them 100 days notice before we do that. If they dont cure the problems we have then we will revoke their license. We sent them a letter today informing them of that, so the 100-day clock has started." Sun Microsystems, whose Solaris operating system is based on Unix, moved quickly Thursday to assure its customers that its licenses were all in order. John Loiacono, the vice president of Suns operating platforms group, told eWeek on Thursday that the company had assured its customers and partners that it has licensing rights to Unix, for both SPARC and the recently available x86 systems. "As part of a series of licensing agreements, Sun acquired rights to make and ship derivative products based on the intellectual property in Unix. This forms the foundation for the Solaris operating system that ships today. "Suns complete line of Solaris and Linux products -- including Solaris for the SPARC and x86 platforms, Trusted Solaris, the highly secure operating system, and Sun Linux - are all covered by Suns portfolio of Unix licensing agreements. As such, Solaris and Sun Linux represent safe choices for those companies that develop and deploy services based on Unix systems," he said. IBM corporate spokesman Bill Hughes told eWEEK on Friday morning that the company had not yet seen the lawsuit and was thus unable to comment on it at his time. A spokeswoman for Linux distributor Red Hat told eWEEK recently that the company had not been contacted by SCO with regard to any violations of its IP or other rights. A Microsoft spokesman declined immediate comment. SCO, formerly Caldera International Inc., recently created the SCOsource division to create new licensing programs and products for its intellectual property. That move followed news last month that the firm was planning to make some users pay for some Unix software they were running, unlicensed, on Linux. The first deliverable from SCOsource was the licensing of its Unix shared libraries under a new product license called SCO System V for Linux. That product lets Linux customers run Unix applications, originally written for SCO OpenServer and SCO UnixWare, under Linux in an Intel environment.


 
 
 
 
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.

 
 
 
 
 
 
 

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